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Frequently Asked Trading Questions

This section is dedicated to answering commonly asked questions.


Normally, a Equity CFD will remain open until the holder decides to close the position. However, there are certain circumstances under which the position will be closed, irrespective of the client's wishes.

1. Takeover of the company underlying the CFD.
At times, companies on which Equity CFDs are open will be subject to takeover bids, either agreed or hostile. Positions in CFDs may remain open or be opened during this time. However, any open position will be closed out at the prevailing market price in the event that the shares cease to be quoted in their existing form.

2. The client's failure to meet any Margin requirements.
As previously explained, Margin is calculated daily on a mark-to-market basis. If there is any shortfall it must be covered on the same day as the margin call. Failure to do so may result in the position being closed at the prevailing market price, irrespective of the client's view. Any shortfall will be deducted from the Initial Margin deposit and any resulting balance will be credited to the client's account.

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The agreement reached between the two trading parties to a Equity CFD is to exchange the profit or loss on a stated transaction and does not involve any exchange of ownership of the underlying asset. As such the owner of the 'long' side of the transaction based on an underlying equity has no voting rights or any right to instruct the seller to act in any particular manner, as in a takeover situation.
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Following a purchase of an equity holding, you are entitled to receive any dividends paid by that company. Although you are not the beneficial owner of the shares, as the holder of a long Equity CFD position you are entitled to receive a cash sum similar to any dividend declared by the company while the position is held open (less any tax or administration charges). Conversely, is you are the holder of a short Equity CFD you are required to pay a sum equal to the gross dividend, irrespective of whether you hold the underlying position. The deciding date for the entitlement to a dividend is the same as the ex-dividend date declared by the underlying company. You are advised to check the dates of any impending dividends before entering into Equity CFD positions, your personal broker at Blue Index can provide you with ex-dividend dates.
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CFDs are available on most stocks on all the major global exchanges (e.g. FTSE, S&P, NASDAQ, DAX and MIB). CFDs on smaller capitalised stocks can be traded on a prior approval basis. Approval usually takes a matter of minutes.
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